Benchmark rebounds from worst session with trading halts
South Korea’s stock market surged on Thursday after a historic plunge the day before, as forced selling linked to leveraged positions began to unwind and oil price fears moderated. The Kospi jumped as much as 12% and was on track for its best day, according to LSEG data cited in the report, after falling 12% on Wednesday in its worst single-session decline.
The rally later cooled but remained sharp, with the Kospi up 9.6% at 5,583.9. Large index constituents Samsung Electronics and SK Hynix rose more than 11% and 10%, respectively. The Kosdaq, which tracks smaller companies, ended the session up 14.1% at 1,116.41.
Amid the rapid move, the Korea Exchange briefly halted trading on both the Kospi and the Kosdaq, underscoring how quickly volatility has returned to regional markets as investors react to geopolitical risk and energy pricing.
Strategists point to leverage unwind rather than fundamentals
Market participants described the rebound as technical rather than a shift in underlying economic conditions. Daniel Yoo, global market strategist at Yuanta Securities, said the move was driven largely by a reversal of leveraged selling. He said it had little to do with fundamentals and more to do with how quickly margin-based positions were forced out of the market.
Yoo said a wave of margin calls among retail investors triggered heavy selling earlier in the week. Once those positions were unwound, the market began to recover, he said, enabling a sharp snapback as selling pressure eased.
Oil volatility remains central for an energy importing economy
Strategists linked the earlier sell-off to concerns about a renewed oil shock tied to the expanding Iran conflict. Raisah Rasid, global market strategist at J.P. Morgan Asset Management, said Wednesday’s decline was driven mainly by upside risk in oil prices as geopolitical developments evolved.
Rasid said South Korea’s status as a major crude oil importer makes the market sensitive to uncertainty over how high oil prices could climb. Sustained increases, she said, could weigh on the current account balance and add to inflation pressure.
Sentiment improved as oil prices began to stabilize, easing fears of an immediate supply disruption and helping equities rebound, according to market watchers cited in the account.
U.S. steps to support Gulf shipping help risk mood across Asia
Broader risk appetite was also supported by policy signals from Washington. U.S. Treasury Secretary Scott Bessent said on Wednesday that the administration would roll out measures aimed at stabilizing oil shipments through the Persian Gulf, signaling readiness to intervene as tensions threaten a critical energy corridor.
The improving tone extended across the region. Australia’s S and P ASX 200 gained 0.44% to close at 8,940.3. Japan’s Nikkei 225 rose 1.9% to 55,278.06. Hong Kong’s Hang Seng edged up 0.35%, while China’s CSI 300 climbed 0.98% to 4,647.69 after Beijing set a 4.5% to 5% growth target for 2026 and kept its budget deficit goal at around 4% of GDP.
Kieron Poon, investment director for Asian equities at Aberdeen Investments, said global markets are likely to remain volatile in the near term, with further downside possible if risk aversion persists as the Iran war continues. He added that Wednesday’s sell-off in Korea was also amplified by timing effects after a public holiday on Monday, which meant earlier declines were effectively compressed into subsequent sessions.
Memory chip outlook remains a core pillar for the index
While the rebound was driven by positioning dynamics, strategists said South Korea’s longer-term equity story remains tied to the memory chip cycle. Rasid said demand and supply conditions in memory are likely to stay tight through this year and potentially the next, supporting the structural case for Korean equities.
Market concentration adds to that linkage. Samsung and SK Hynix together make up almost 50% of the Kospi, based on Morningstar data cited, meaning swings in memory expectations and global technology sentiment can quickly shape index direction.
Kospi rebound, South Korea stock market, margin calls unwind, Korea Exchange trading halt, Samsung Electronics SK Hynix surge, Kosdaq 14.1% jump, oil price risk importer, Scott Bessent Gulf shipping measures, Asia markets rally, memory chip demand tight
